China orders price probe amid sharp rise in food costs

BEIJING (AP) - China's government announced an investigation Friday of sharply rising food prices, accusing companies of hoarding and threatening social stability.
Communist leaders are alarmed at a jump in politically sensitive food prices, which hit China's poor majority especially hard. Authorities have ordered measures to increase supplies of pork and other basic goods.

Investigators will look into why prices of grain, vegetable oil, pork, beef, mutton, and poultry are rising so fast, the National Development and Reform Commission said on its website.

Food prices in June were up 7.6 per cent from the same month last year, driven by a 74.6-per-cent jump in prices for pork, China's staple meat.

"Some industry groups have organized co-ordinated price rises and some companies have colluded to raise prices," the NDRC statement said.

"This seriously disrupts normal price order and influences social stability."

Pork prices have risen especially quickly but consumers also have seen the cost of other basic goods, including vegetable oil and instant noodles rise.

A Chinese consumer association asked the NDRC this week to look into increases of up to 40 per cent in the price of instant noodles, suggesting producers might have colluded to fix prices, Chinese media reported.

Premier Wen Jiabao last week promised to boost pork production by helping pig farmers with free vaccinations, subsidies and other aid.

Shortages have been caused by farmers' reluctance to raise pigs due to high feed costs and low wholesale prices, as well as an outbreak of blue-ear disease, which has forced the destruction of thousands of pigs.

Wen also ordered local governments to pay subsidies to poor families and students who are hurt by higher food prices.

© The Canadian Press, 2007